Dillard’s shares drop 9.4%

Profit up 14%, but analysts predicted better news

— Shares of Dillard’s Inc. tumbled Monday after the Little Rock-based retailer reported a 14 percent increase in profit for its 2012 fiscal fourth-quarter, slightly missing analysts’ expectations.

Dillard’s shares fell 9.4 percent to close at $76.92 on the New York Stock Exchange in more than double the company’s average trading volume.

Dillard’s stock closed at $84.92 on Friday and opened at $81.00 Monday. Dillard’s released its earnings report before the stock markets opened on Monday. Shares of the company were trading below $60 at the end of the 2011 fiscal year.

The company reported a net income of $161.4 million for the period that ended Feb.2, up from a profit of $141.5 million in the same quarter in the 2011 fiscal year. Earnings per share were $3.36, compared with $2.77 a year-ago.

The Dillard’s earnings were helped by a net after-tax credit of $23.9 million, or 50 cents per share. Excluding the credit, Dillard’s adjusted earnings were $137.6 million, or $2.87 per share, just missing analysts estimates of $2.88.

Dillard’s slight miss is likely the cause of the drop in the company’s stock, said Bob Williams, senior vice president and managing director of Delta Trust Investments Inc.

“Wall Street is vicious on negative earning surprises,” he said. “They just don’t like negative earning surprises.”

Williams said the value Dillard’s shares lost in one day took the company three months to gain.

The company’s fourth quarter in fiscal 2012 lasted 14 weeks, while the same quarter in fiscal 2011 was 13 weeks.

Dillard’s reported small sales gains in its fourth quarter. Net sales for the period were about $2.1 billion, compared with $1.97 billion for the same period in fiscal 2011.

The company said sales were strongest in ladies accessories and lingerie, and men’s apparel and accessories. Dillard’s weakest sales were in home and furniture.

“We are pleased to report a strong finish to a very successful year at Dillard’s,” William Dillard II, the company’s chief executive officer, said in a prepared statement. “Our positive sales performance and gross margin expansion combined with expense control drove strong cash flow throughout the year. As a result, we were pleased to return cash to shareholders in the form of a $5.00 special dividend during the fourth quarter.”

For the year, Dillard’s sales increased about 5 percent to $6.6 billion, compared to $6.3 billion in 2011.

Dillard’s reported a 2012 fiscal year profit of $336 million, or $6.87 per share.

Excluding an after-tax credit of $26.7 million, or 55 cents per share, the company reported an annual net income of $309.3 million, or $6.32 per share, in line with analysts’ expectations of $6.317 per share.

For the 2011 fiscal year, the company reported a profit of $463.9 million, or $8.52 per share. The company’s adjusted net income, excluding after-tax credit, for 2011 was $229.4 million, or $4.21 per share.

During the company’s 2012 fourth quarter, Dillard’s bought back about $23.4 million, or 294,000 shares, of common stock at an average price of $79.69. For the year, the company repurchased about 2.8 million shares for $185.5 million.

Dillard’s said it plans to close its store at the Cache Valley Mall in Logan, Utah in the first quarter of 2013. The company has 284 stores and 18 clearance centers in 29 states.

Business, Pages 23 on 02/26/2013

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